Spanish Repsol will withdraw from Russia’s oil and gas assets for environmental reasons

    03 Jan 2022

    Spanish Repsol will withdraw from Russia’s oil and gas assets for environmental reasons, Kommersant reports. This is the first foreign company to announce its withdrawal from Russian assets not through sanctions but through decarbonization.

    Spanish Repsol is based on Russian oil and gas assets. It is doing this first under the slogan of decarbonization (reducing carbon emissions to zero), writes Kommersant.

    According to the publication, Repsol will lose Russian assets by the end of 2021. It will sell to a partner – Gazprom Neft – 68% in Eurotech-Ugra and 50.01% in ASB Geo. The price of the deal will be symbolic, sources say.

    Repsol is a world-renowned multinational company with 650,000 bpd, large refineries, gas station networks, and green energy. It has declared carbon neutrality by 2050, and recently made the goal even more aggressive – a 30% reduction in the total carbon footprint by 2030. This makes Repsol one of the industry leaders in this direction.

    Repsol is the first foreign company to announce its withdrawal from Russian assets not through sanctions but through decarbonization.

    Repsol’s investment in Russia peaked during the years of high oil prices, but even then it was looking for new options for cooperation with state-owned companies, said Karen Dashyan of Advance Capital. According to open sources, Repsol could spend at least $ 300 million on Russian assets, which it is unlikely to return, says the expert.

    Repsol’s departure from Russia is in line with the trend of oil and gas companies dumping the dirtiest assets. Decarbonization plans are also available at Total and ExxonMobil, which have been operating in Russia for a long time, but are too deeply involved in Russian projects to follow Repsol’s path.

    As it became known to Kommersant, against the background of changes in the global strategy, the Spanish Repsol, formerly a large investor in the Russian fuel and energy complex, is leaving the country. The company will sell its stakes in the oil assets of Evrotek-Yugra and ASB Geo to its Russian partner, Gazprom Neft. The deal will most likely be closed by the end of the year, and its amount, according to Kommersant’s sources, will turn out to be “symbolic”. Experts believe that Repsol is leaving the Russian oil and gas industry as part of the company’s announced goal of an overall reduction in investment in hydrocarbons.

    According to Kommersant’s sources, the Spanish Repsol is leaving the oil business in the Russian Federation. Now she has shares in a joint venture with Gazprom Neft – 68% (at the beginning of 2021) in Evrotek-Yugra and 50.01% in ASB Geo. In the near future, Gazprom Neft will consolidate 100% of enterprises in the near future, Kommersant’s interlocutors say: the decision has already been made, and the parties hope to close the deal by the end of the year. According to Kommersant’s sources, the assets will be sold “for a symbolic price.” Gazprom Neft, Repsol and FAS did not respond to Kommersant.

    Repsol’s most notable work in Russia was in early 2010, when the company formed a large production JV with Alliance Oil, then owned by the Bazhaev family. In 2013, a joint venture called AROil & Gaz (AROG, Repsol’s share is 49%) owned assets worth $ 885 million in Tatarstan (Tatnefteotdacha), Samara Region (Saneko) and Khanty-Mansi Autonomous Okrug (Evrotek). In the same years, Repsol consolidated several oil assets in the Khanty-Mansi Autonomous Okrug as part of Evtotek-Yugra.

    Evrotek-Yugra owns prospecting and appraisal licenses for the Sverdlovsky, Kileisky, Karabashsky-3 and Karabashsky-9 blocks, as well as two production licenses for Karabashsky-1 and Karabashsky-2, where the key asset of the project is the Ervie field (formerly ). Its reserves are estimated at 196 million tons of oil and 10.6 billion cubic meters of gas. The field is characterized by a complex geological structure; production has not yet begun. ASB Geo is conducting reconnaissance at the neighboring Karabash-10.

    But in 2014, Alliance Oil was bought by the ex-head of Rosneft, Eduard Khudainatov, which led to the change of Repsol’s key partner to AROG. The sharp decline in oil prices also negatively affected the future of the asset. In 2017, AROG sold Eurotec’s gas assets to NOVATEK for RUB 3 billion, and Gazprom Neft bought 25% in Evrotek-Yugra, then increasing its stake to 32%. In 2019, Repsol considered joining the Gazprom Neft project at Gydan for the development of the Leskinsky and Pukhutsyayakhsky blocks, but changed its mind against the backdrop of the pandemic. This year, Spanish media reported that Repsol agreed with Alliance Oil to sell its stake in AROG.

    Repsol is the first foreign company to exit Russian assets under the slogan of decarbonization.

    Previously, Western majors limited investments in Russia due to US and EU sanctions. But the weak business economy in Russia also influenced Repsol’s decision. As Kommersant reported on December 18, 2019, the company sought to transfer Evrotek-Ugra to additional income tax (APT), since it did not consider the asset to be profitable in the current system. However, since its participation in the AIT was limited, Gazprom Neft opted to transfer to a new tax the plots entirely owned by it.

    Repsol recently announced ambitious ESG targets – moving towards carbon neutrality by 2050, reducing CO2 emissions by 15% by 2025, as well as increasing investment in green generation, explains Dmitry Marinchenko of Fitch, and moving out of non-strategic Russian assets is a logical step.

    The peak of Repsol’s investments in Russia fell on the years of high oil prices, but even then she was looking for new options for cooperation with state-owned companies, says Karen Dashyan from Advance Capital.

    According to data from open sources, Repsol could spend at least $300 million on Russian assets, he says, doubting that it will be possible to return this money as part of transactions to exit the Russian Federation.

    The expert emphasizes that all exits of foreign companies from assets in the Russian Federation in recent years have been made with significant write-offs of investments due to the strategic nature of the transactions.


    In December 2021, Russia vetoed a first-of-its-kind UN security council resolution casting the climate crisis as a threat to international peace and security. This vote sank a years-long effort to make global heating more central to decision-making in the UN’s most powerful body. Read the full story here.

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